In the “Consumer Protections” pilots (under Case
Study 2, Programmable Payments), a scalable,
by providing them with more means to attract new
consumer segments and build consumer rapport.
“
retail escrow” prepayment product facilitating
Furthermore, an e-HKD could facilitate “open-
loop system” conditional settlements, enabling
customisations to be applied regardless of the
means used to make the payment. For instance,
consumers would be able to spend vouchers issued
by merchants without the limitation of having to
use a specific e-wallet. With that said, the process
of implementing programmability will likely require
some technical expertise, and businesses will either
need to possess this expertise themselves or
partner with a financial institution or technology
partner that can assist with implementation.
conditional settlements with e-HKD could
incentivise businesses to provide good, consistent
service from the outset to build trust with
consumers, whilst providing consumers with the
confidence to engage with businesses in the
absence of initial trust. The business also provides
the good or service with the confidence that the
consumer has already made or can make payment.
In one set of surveys , 93% of consumers
responded that conditional prepayments with
e-HKD could alleviate their concerns of losing their
money as a result of a merchant going bankrupt,
whilst 70% of merchants responded that conditional
prepayments with e-HKD would help build loyalty.
In the “Loyalty Programmes and Targeted
Spending” pilots (under Case Study 2,
Programmable Payments), a low-cost alternative
using a hypothetical e-HKD could enable merchants
of all sizes to build and execute their loyalty
programmes. One benefit of note was the potential
of an e-HKD to automate the issuance, tracking
and reconciliation of vouchers and rewards.
In the “Investments” pilots (under Case Study 2,
Programmable Payments), the investor benefits
from faster order fulfilment as the fund manager
has an incentive to fulfil the investment fund order
as soon as possible to receive the investor’s
prefunding. The fund manager is also incentivised
to facilitate conditional settlements as the unified
process enables them to incur less operational
overhead and risk.
During one pilot’s testing , both consumers and
merchants found the mechanism to automatically
apply rewards to consumers’ transactions easy to
use. Merchants also noted that its low cost and
ability to implement sophisticated and frequent
promotions were attractive features. In another
In this connection, surveyed financial institutions29
viewed that the benefits of atomic delivery versus
payment settlements, and reduced settlement and
counterparty risk were attractive factors supporting
this mode of conditional settlements using e-HKD.
survey, 80% of respondents had a favourable
view towards programmability being a unique
feature of an e-HKD, should it be issued.
Flexibility in ringfencing and tracking funds
Level playing field for businesses
Last but not least, a programmable e-HKD could
enable the ringfencing and tracking of funds to
be achieved with greater ease and less operational
overhead. Instead of distributing funds to, for
instance, stored value facilities (SVFs) which then
configure the restrictions on their platforms, the
intended use of the funds could be programmed
from the outset to govern how it can be spent
irrespective of the payment platform. This could
also enable the funds to be used across different
payment platforms, rather than being limited to a
A programmable e-HKD has the potential to
level the playing field for businesses, by allowing
businesses of all sizes to integrate and automate
payment-related processes, as well as to develop
and provide goods or services with a greater degree
of customisation and flexibility. This could benefit
small businesses in particular (which may be limited
by financial, operational or technical resources),
2
2
3
3
8
9
0
1
Survey sample: 110 consumers and 10 merchants
Survey sample: 12 financial institutions and a small population of investors
The pilot involved around 150 individual participants, five merchants, and 400+ transactions
The pilot involved over 150 individual participants, seven merchants, and 500+ transactions
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